stock of the day, boeing now up 4%. i would like to thank our guest host. we haven't had a guest host all morning. >> i didn't even realize that. anyway, thank you. what is your last word? there is no last word. >> good-bye, everybody. see you tomorrow. now it's time for "squawk on the street." ♪ ♪ ♪ good morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer live on the nyse. it does not get bigger than mornings like this. boeing, at&t, procter, apple, of course, from last night and the futures are a little mixed here hugging the flat line and a miserable durable goods order since august and we'll see if we get a 3% gdp number on friday. in europe, second monthly decline in german business

sentiment and there is a look at how the economy is doing this morning. our road map begins with disappointme disappointment. investor disappointment in apple. shares back below 400 despite the iconic tech company now becoming the single biggest dividend payer in the world with the largest buyback plan ever launched. add to that the first drop in profits in the decade. is the romance finally over? >> #rebound. the market's looking to open higher after shaking off a dramatic snap sell-off following the erroneous tweet yesterday. >> earnings from both topping estimates. >> and bird flu in china, aside, yum brands serving up a consensus quarter with reaffirmed guidance for the year. apple falling back below 400 this despite better than expected second-quarter results. dividend and buyback moves

designed to return 100 billion in cash to shareholders by the end of 2015. wall street focusing on the weaker than expected revenue guidance for the current quarter. ubs and nomura cutting price targets for apple and bmo downgrading from market perform to outperform. a lot going on, jim. the fourth consecutive quarter, by the way in which they're going to gap down the following morning. >> look, i'm going to give you the positive first. given the fact that tech stock have bottomed at a certain yield, this is possible that they put in a floor soon. when everyone downgrades you tend to want to buy, not sell. david pioneered the notion that everyone is a penguin today and it could be a would be down, but that said, management here is now despised and this is the kind of conference call that was a revolt against management. management talks about ecosystem and people are trying to figure out how slow things really are.

the management talks about china and they have 11 stores and there's a lot of people in china and how about having a thousand stores? >> there isn't anything about this call that isn't the people rising up against tim cook and so what you have is a situation where management's in complete denial. what people wanted was some growth. what people wanted was new products and what people wanted was a change in the discourse. had they taken money that they want to buy back shares and had they bought, netflix, dish and sprint. they would have owned the living room and the stock would be at 550 right now. >> well, i don't know about that. that would introduce a lot more risk and the business model would tack them far to what they're doing. >> they're borrowing to pay. >> they are borrowing rather than repatriating cash which is a completely different policy. >> it's bizarre. >> i think you can lend them at a fairly secure level given the 145 billion in cash, but jim, i

mean, i've talked to a couple of investors that i'm warning every morning in this stock, in particular. it was genuinely, uniformly negative. i'm telling you the core business numbers are terrible and coming back to the larger construct. if you have revenue growth you'll have to give up operating margin, period and what's the multiple. >> say it's 36 bucks a share. what's the multiple? >> see, there's a lot of subtext and it is just a great greek tragedy to me. it's just the chorus is saying, look, you're not as good as you think you are so you can't charge what you used to do and they are saying we are every bit as good and we have the ecosystem and it feels a lot like the brazilian rain forest and the analysts are trying to burn it down. it was a graphically painful conference call because they

don't like tim cook. the margins for the past few quarters, 44, 43, 40, 38, 37, 4 this time. >> that's gross margin, right? >> yeah. >> it's still, by the way, a high-class problem. wow! what are samsung's margins? >> everybody at home is saying i don't understand it. i only own apple. everybody owns apple and we own the stock. it's going down because of that. everyone owns an apple and they already own the stock and they'll be beleaguered today and they'll read all of the analyst comments and say i have to sell precisely when the stock could bottom, but you've got to give us something. did you read that stuff about the new products? >> hey, trust us. now they're talking about introducing them. >> the idea that they're coming late this year if at all this year i think definitely gave people pause. >> there is a good piece today in all things d, rerferencing a

quote, we can't just ship junk, meaning you might want a bigger screen right now. we are not going ship a product with a bigger screen that has less color resolution, less brightness, things that are, the reason for mossberg's trashing of the samsung galaxy has four today. >> david polk says they're getting conservative, too and maybe apple needs to have the competition. >> why should there be expectations beyond it being incremental in the technology that was revolutionary only a few years ago. >> if two companies offer similar product, which are you going to buy? >> if china is not where you're selling and that's the greatest market and not selling well. >> they were up 11%. >> and you're tim cook and i'm just trying to give you the

weird dichotomy in the call. tim cook answered the question and the company is doing many things right, but the stock is what matters to people at home. what do you think a lot of people would do? say cook was out and jack dorsey, steve ballmer, you name it. >> i think they would go social, mobile and make a series of large and noisy acquisitions that would change the course of apple so that they don't need to go through cable to own the living room. they can go through dish. they can own the telephone with sprint. you're talking about a significant change in the business model to much more of a recurring revenue business as opposed to technology which -- they do 4 billion in quarter in services and itunes. it's not like that won't be recurring. >> two-thirds of profits are on the phone. that's the story. >> there was a guy who came from pepsico and destroyed apple. job his to leave, right? >> it's interesting.

what this market wants is pepsico. widening gross margins and good yield, stable cash flow. i'm just comparing what the market wants. >> that incredible growth spurt that created this incredible company and this amazing market value, you don't usually get that from the recurring revenue business without new products and incredible growth. there are two companies. >> i'm -- my charitable trust owns it. i think it's a great company, but one company is selling billions of dollars worth of product and that's apple and one company selling billions of hamburgers and that's mcdonald's. these companies are in a fight for capital. whose dollars are going to go where? i read apple and i say, you know what? i have expanding gross margins, mcdonald's and they're reinventing ways to eat food and they're rolling it over thousands of stores and china,

they have -- and you will also get the debate between an increase in a huge repurchase and is that worth doing? that's money that's not going to shareholders' pockets and being used to buy back stock and it will increase earnings per share. >> which he told buffett he would never do and he would increase it even more to the real floor and it was a 3% yield. so did the at&t floor. >> look, if you want to pay you look at what the yield is that's the floor and you give people that floor instead of having the stock come down to create the floor. david, you're right. i want to apologize for this. i think apple -- i have apple products. i love them. i think apple is doing a great job, but at the same time in this, this is a stock market and this is a sheer, difficult, harsh, judging machine that is the stock market, and i think tim cook is making a great product.

apple's making a great product, but we already have one and we already have a lot of the stock and we don't want as much. am i being harsh? i'm saying the analyst community is harsh. now, procter & gamble, i know it's not what everybody wanted today, but do you remember the open rebellion of procter & gamble at 63 and mcdonald's said you know what? let's blow the darn thing up and give what the analysts want and the stock goes from 63 to 80 and now it will pull back a little today and it's had a remarkable run and that was a guy saying i have to blow it up. as strange as it is. procter is a great company and apple say great company. you have to blow it up and take a new direction. >> we'll talk more about procter and some of the problems in beauty and their guidance this morning. in the meantime, michael corbett presiding over his first meeting as ceo. our kayla tausche is at that

scene. >> hi, carl. it's a seminole day for a big bank undergoing a major transition. the first time mike corbett will address shareholders en masse. he said we won't veer from our current strategy. our focus is execution. he makes a couple of remarks about the 2012 performance, saying it was offset by some charges for legal and otherwise that unfortunately canceled out that momentum. as for that strategy, he says they're recalibrating and focusing on 150 major cities worldwide and they want to be more international and more urban and they want a greater digital presence for their customers and they're in 80% of those markets. at this event last year, they voted against vikram pandit's pay package. we need to regain trust with shareholders and regulators and he's been meeting with regulators for the last six months and they made it clear

that banks don't need to get bigger and that was when the too big to fail bill was coming out. interesting to see what he'll say this morning. guys, back to you. >> all right. thanks very much, kayla tausche. >> cor bat is doing a good job. one day after a 152-point rally on the dow. that three-day winning streak putting the blue chips within 1% of the record closing high. yesterday's session not without drama. just about 1:08 p.m. eastern, stocks plummeted in a reaction to a fake a.p. tweet about bombs at the white house. it was about a four-minute drop and recovery, but man, it was freaky. >> yeah. you have a lot of -- i don't know whether, jim, your thoughts. a lot of retail investors waking up today. flash crash, facebook. are we going to forget about this in six months or not?

>> no. we're going do something new. we'll ban for people at home, protect yourself. >> first of all, you get rid of the stop loss orders because you are just carrying. you are the prey to the -- because the hf, so you end up selling, say you end up selling 3m at the low of the day because you have a stop loss there because your broker told you you have a stop loss and you can't believe your report. it's brutal. you use stop limit orders and let's use this. let's presume whoever hacked it yesterday, this is a good game. i'll find a way to hack twitter and put some orders below the market for stocks that are your favorite. 3m at 100. let's use the scoundrels to make money. >> that is so cynical. i came on with my friend erin burnett and said procter & gamble, 49 bid for 50 and then

sell it at 61. i want everyone to play that game at home by recognizing that fraud is part of the equation. the government cannot stop it and there are ways to perpetrate it and there are guys making a bid for david hudson. >> now it's, you know. >> i testified on behalf of the government when someone did one of these things and the fbi came in and said how did you -- >> some ridiculous company and all i'm saying is it's a fact of life. so don't use the stop loss orders. you'll get the worst price and accept the fact that any given day that's going to happen and be ready and have a low bid and go in there and buy verizon off of at&t not doing well. >> wire side reporting that twitter is working on a two-step authentication which the company has not confirmed and probably won't until it's actual low happening. >> more things like this are going to happen.

>> the big guys are always one step ahead of the posse because the high frequency trading that makes this stuff, exacerbates the stuff is a-okay with the sec. >> a live and exclusive with scott mcgregor. the communications chipmakers are out with earnings and where does the role as the supplier to apple fit in. whirlpool's ceo will join us. the stock is up in 12 months. what are the numbers telling us about housing, europe and the economy. hard to tell which direction we'll go here. we'll get the opening bell in about 15 minutes.

all right. shares of yum brands up sharply in the pre-market. the parent of kfc, taco bell and pizza hut posted profits of 70 cents a share. revenues in line with their forecasts. yum also reaffirmed its prior outlook for the full year in terms of earnings despite saying that the bird flu issue continues to negatively impact same-store sales in china. of course, china is the key for yum. they seem to be navigating it fairly well, although i defer to you on this name. >> i think the world of david novak. this industry whether it be comp

son, whether it be the -- look, shake. there are titans in this industry of which novak towers over everyone. and pizza hut, and the reason i say that he towers over them is because every analyst who doubted him point-blank did not understand the tenacity of this man and the perseverance of this man including the merrill downgrade yesterday that is making this stock go up as much as it did. merrill basically predicted the opposite would happen. david novak has reassured a lot of people that it is his life's work to restore china and he is not going to lose china. he doesn't want to be stillwell and doesn't want to be marshall. he doesn't want to be with his state department in 49 to 52 attacked by senator mccartney. he's done a remarkable job and to bet against novak is a fool's game. >> i'm quickly reviewing a lot

of those generals and the likes. he's not going to lose china. >> do you have time, though, to wait and see how he's figuring that out? >> i think you do. he had the same address i did. >> we both lived in our car for a spell. he's not an easily defeated man and he's putting more money behind china where he had down 40% same store and he came back and the analysts who tell him don't understand him personally and his resolve. sometimes the top guy matters so much, reed hastings. >> it brings us to the show on friday, of course, not yum, but mcdonald's in this case. we'll talk to don thompson live, of course, about not just the consumer and the global economy, but the pipeline over there. whether or not they're taking or losing share. the stock, of course, up 13%. very special squawk on the street takes place at 9:00 a.m. friday morning.

>> people do not understand. i know they make burgers, but this is the engine of the economy. it's what we do great and we should celebrate it and i'm glad you're going. >> when we come back, the need for speed. cramer getting ready to put you on the fast track toward profits in his mad dash. >> futures here a little meddling. we'll see what happens on a wednesday morning. a lot more "squawk on the street" from the nyse straight ahead.

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about six minutes before the opening bell. time now for cramer's mad dash ahead of the market open. let's talk about companies that make chthings that move people places. >> this is a man at boeing who came through, 787 wasn't that supposed to be terrible? 737, wasn't that supposed to run out of gas? the defense department, sequester. no! manage am trumps all that and now the gross margins will start climbing and don't forget it's a seven-year seekel and they have both 737 and 787 going. >> they will take a 127% return in a year. >> how about ford and mr. mulally? >> al wants to go out with a bang. here's what he did. north america is on fire and

people like the one ford, okay? that's offsetting the attempt to really down size europe quickly. so the cash flow is bountiful and the dividend can be raised. al mulally will lead with a bang. >> europe? >> i'm up. we didn't talk about lumber liquidators which is the key to this market. >> you're just ignoring europe like everybody else. >> i'm ignoring europe except when it comes to apple. >> all right. >> we have so many things to cover at that opening bell, of course, including taking a look at how boeing and ford performed so many other earnings. p & g. they have the most widely held. >> i will be doing at&t in the faber report. a lot coming up here and get ready for the opening bell. "squawk on the street" coming back right after this. i know what you're thinking...

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apples and haven't touched on whirlpool and fedex so much. there was some worry, jim, that it wouldn't happen. >> i thought it was interesting and it's a psychological positive, and i think that's true because the last quarter was bad. you mentioned the whirlpool. people expect after sherwin-williams that they would blow the number away. i know we're going to speak to him. look, the company has had a remarkable run and i don't want to get against that juggernaut. >> you were tweeting about the whole sell in may thing. poems are for losers. >> goldman is out today saying the same thing. they're in it for the summer, that a lot of the risks like a cyprus, like weak, u.s. data has come to pass and we're sort of into that mode now. >> it's a diddy. it's a poem. it's a limeric, sell away and go

away. fine. this mark has withstood a lot of very negative things and it will withstand sell in may. >> remember comings? >> no one. not een the rain has such -- i know that was hannah and her sisters. >> the best. >> there's the opening bell at the top of the screen. and psx, a new exchange designed specifically for exchange-traded products. durables, jim, to start broad, were no good. they're just no good. >> it's the two economies. i kimberly-clark last night. kimberly-clark is trying to do more with less. trying to make more money with gross margins and you know they had added employees, but that's

the economy. mcdonald's is the economy and then there's this whole other economy which is what bernanke is stuck with, but one of the big themes in the at&t call, where the heck is it? >> we'll talk about that. >> new business formation and the key to the enterprise business at at&t again. we'll go over the results shortly from the company and watch that stock and see how it's doing. if my systems were working i would give you a quote, but they're not. that is an important component and people do listen to at&t call in part to get a macro sense of what's happening. not great. >> let's go to your pc because one of the takeaways from apple and i'll defend that at a certain point which was a washout was how can you be with dell? how can you want to buy dell given the fact that pc sales for even apple weren't that good. >> 4 million macs or so? >> what is happening at dell if

that's what apple is doing in pcs? >> we don't know. we will find out. dell's going to report a quarter and it's still a public company with only one better out there. we didn't get a chance to talk at all on friday and that's a somewhat shocking position, and not unexpected for you given all of the things we discussed. >> sell dell, sell dell, sell dell. >> and what would be in the proxy and what was there and told people it might be a $3 billion operating number and maybe lower. who knows where we are right now? jim, you're right. it will be interesting if if you're in the southeast you're saying pc shares don't matter. >> chanos is on at 12:00 on wapner's show. i would love to hear him say dell is, like, a $6 stock. >> he has an absolute opinion on it. >> i can't wait to hear him. >> meantime, we'll talk to the

broadcom ceo in a little while. >> he delivered. >> did beat by nine. >> good for him. >> he exceeded and obviously, a lot of the business coming from smartphones. >> one of the things -- i held on for that stock for a long time for the charitable trust is they're a big samsung component and that has not helped him until today. apple put a floor into the stock with that dividend and these analysts may all hate it, but if you're trying to figure out whether to buy procter today and you're thinking everybody buys the stock. the reason they were so mum on their cash strategy is because they knew they would have to save it for a quarter where the guidance was not going to be good. listen, they have killer products and there will be a lot of crow meat. they just announced the scheduling of the developer's conference, june tenth through the 14th which is going to be

the next catalyst. do they unveil a radio? do they give more clarity on television? ios 7. >> i hated the fact that they would not give us a fourth quarter day. guys are trying to figure out their numbers for the year and david, when you look at your numbers, you need a new product to get that bounce. >> and you're not going to for some time. what's that summer quarter going to look like? what's the number on that going to look like? the system is fabulous. respect the ecosystem. >> the ecosystem. >> i'm going to go to disney. >> is that what you mean? >> i historically like the ecosystem. this is the quandary at home. everyone loves apple, but that's the problem. samsung can come underneath and get you to love apple less. i would not trade my apple in or

my apple mac at home or my ipad or my mini? yes. i'm glad, for once my charitable trust has a position on apple. apple is better than treasurys. now you've heard it. apple versus the ten-year david, i'm taking apple over your tenure. right in your face. >> which is a good segway into at&t because a lot of people will say as we give you "the faber report" right now. that 4.6% dividend yield helps create a floor on the company and let's get to the numbers themselves and reported after the close yesterday followed by the conference call that jim referred to. you can see the stock is quite weak. it was not a good quarter for at&t and let's start with the business that everybody focuses the most on which, of course, is

the wireless business. when you take out tablet subscriptions, new tablet subscriptions, post paid subs weren't up at all. >> last i heard it was down. >> that's you doing good homework because it didn't jump out at me. >> that is the case, and so people are focused on the case that they did lose post paid subs a bit. >> should you take out tablets, they're on phones, but they are connected to the internet. they're important and they generate a lot of revenue, so take it for what it is. we are in a fully penetrated industry when we talk about the wireless industry. we have two main players, verizon, still benefiting, it would seem from perhaps a better network and the introduction of the smartphone. remember at&t is exclusively with apple's iphone for quite some time. verizon is still ramping there. we saw that quarter from verizon which was a good one and not the case here for at&t.

other concerns are the buyback. they've bought back an enormous amount of stock at at&t. it's interesting when you retire a stock you don't have to have a dividend on it and nobody is questioning the ability for the company to pay dividend. >> 400 million shares in the last couple of years. >> jim, that's going to slow. that's going to slow and that is also a concern here because, of course, it aids the bottom line number. what would it have been without that big buyback? >> capex, does it mean they're almost done? positive? >> maybe. they're slowing some of the capex spending. by the way, wireless margins were a bit better than anticipated and there were positives for at&t and then we get to the other parts of the business that are significant. whether it was wire line service to consumers or more importantly to the enterprise and that being business and small business and there the story was not a good one. the company in the release, and i've got that spomewhere for yo.

i'm sorry. i'm all over the place. you can take a look at the numbers right there. on the call, it was not stevenson and it was the cfo who had the call. not painting a great picture for the economy. >> okay. so this is an interesting reflection of new business formation, right? you get a new business and usually you still put a wire out there, and other things that you need for that. >> a couple of high-profile analysts downgraded it and i would have thought after verizon, someone said this is more of a zero sum gain. i'm calling you at 11:01 and said this is a great quarter and do you understand in this environment how well we did. >> what do you say? >> what do i say? you didn't do as well as the key competitor. >> i don't understand. >>y we have a good yield here. >> your revenue growth is you don't have any right now. >> i'm just playing because a

lot of people own the stock and like apple and i'm trying to get a sense that in the end these dividends do make stocks stop going down. >> they're no verizon, that's your point. >> oh, boy, they're going to hate that i said that, by the way, in where we will get a competitor that will be aligned with dish or softdank. conceivably they'll have a balance sheet that will put them in a position to complete effectively and she's done a lot of innovative chips in japan. we'll see. it bears watching. >> i'm watching apple go higher because of that floor, at some point at&t puts in a floor. maybe that's the floor right here to talk about the ten-year treasury. we have ought to get to bob. what's going on this morning? >> modest upside and note,

please, energy and materials were up. commodity markets were strong through the prior open and i know everyone was obsessed with apple and even though the tech sector is flat on the index, most tech stocks are trading to the upside and we're 20% through earnings season and it's not that bad and it's a little choppy and today focus tech and the building materials sector. in tech, forget apple for a moment. did you see broadcom? they had a great report overall and that stock is trading up, and juniper, a little bit of a disappointment there. vm ware, software that was also a disappointment and the semis have been good. texas instruments were pretty good and st micro last week, that was pretty good. i want to go back to the material homing aboutes, because we had a string of earnings reports. per taj homes, 23% guidance above concensus and they also added this, we believe job

growth has increased the demand for home home and there's the m effect. they're up 5% and great report. they announced price increases about three weeks ago for insulation. when was the last time that happened? whirlpool had excellent numbers and that was at a historic high and they affirmed their 2013 earnings guidance, but remember, stocks and a historic high, don't be surprised if it's down today. >> what the heck's going there. that's hardwood retailers, flooring retailers and get this, jim, woe had an expansion in the top line and gross and operating margins and there again, a bit of a demand for housing. ust was a little disappointing and i'll get more on that later and ethan allen were disappointed and they get a lot of shipments to china and they were to the down side. so far, 30% through earnings

seasons were up 2.6% compared to earnings and compared to the same period last year and not bad considering we started at zero just a few weeks ago. >> lumber liquidators had them on the show and these were companies that benefit owens corning from the hurricane. $60 billion. it goes to roof. it goes to floor. lumber liquidators is flooring. rick santelli at the cme group in chicago. >> thanks, jim. if you look at ten-year note yields you can clearly see that yes, we're affected by the not true tweet flash crash, but we've moderated a bit and if you look at the chart for two weeks, this says it all. look at that range compression and as a matter of fact, that chart starts to the 10th and if you start at the 12th we've been in a closing rate from 168 to

172, really compressing. all right. let's look at the dollar index and a lot of technicals involved these days and yoi can see the chart started in february and once again we've made the pass at closing above 83 yesterday and we're still above 83 and it's significant. look at the dollar yen. dollar yen, two-day chart, you see yesterday, it showed up on the dollar yen. make sure you tune in at 10:50 today, we'll bring up important issues with yesterday's routing stocks due to that erroneous tweet and dollar yen. if you look at the euro, we are now in a range and many think we tested the top and the ceiling and the last chart, of course, shows more clearly that if you're trading the foreign exchange market and you really want to look at patterns and generalized patterns because that's what they're looking at. >> how about the metals and energy. let's go to sharon epperson. >> a lot of traders pointing out

that when they saw the durable goods orders and it was weaker than expected and another line of a slowdown of economic activity and perhaps another sign that we'll see quasi qe and interest rates for an extended period of time, that is another reason to buy gold. we are seeing buying on the dips in the metals market and some bargain hunting going and the biggest gainer is copper up from the 2011 lows in the copper market. the other thing that is supportive of metals market of gold prices in particular is the physical demand for gold. we are looking at the demand for gold bars in asia program premiums in multi-year highs and also the demand for gold coin, the smallest gold coins at the u.s. mint .1 ounce an american eagle gold coin, that is actually not in existence anymore. you can't get it. they ran out at the u.s. mint and that is how strong demand is.

we're watching the commodities market and gasoline prices and not only gasoline futures which were down 13% and prices at the pump and $3.50 and it's been that weigh for the last week, they believe $3.65 is too high. we're paying too much. i guess we already knew that. >> sharon epperson and cramer is leading the class. can you imagine what's class like that would be like? >> we'll phied out after the break. shares of one of their key sub pliers rallying and we'll talk to scott mcgregor the relationship to apple which is now positive as we come back. take a look at this morning's early movers.

>> this friday, a global exclusive interview you won't want to miss. mcdonald's ceo don thompson will sit down with carl quintanilla in an exclusive interview. you want to have the taste of "squawk on the street." we'll be right back. it's as simple as this.

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>> in his natural habitat on the grounds of villa nova university, the wild cat is the king of the campus. but it's spring time in philadelphia and now a new species has been introduced into his environment. >> hey! >> "mad money's" back to school tour returns tomorrow. >> boo-yah! >> believe it or not, that is jim in the suit. it's a big week for you, jim. you're heading back to school

tomorrow. you have a new set on mad last night. tell us about villa nova. >> when you think of college you think of wings. this is a return of the back to school tour that we haven't had since we went to tulane and we'll be grading some papers by analysts. stay tuned because i grade -- i am a stern task master when it comes to grades. we have a bell curve. obviously, we'll find out how buffalo wild wings which some people think it's the 52-week high. we'll do learning from them. i think the wild cats know more about youth than i do. >> yeah. >> and youth -- that's an important audience to stay in touch with. >> yes, it is. >> the new set last night, which is universally loved. you didn't want to see it as it was being designed or built. >> regina gillgen, our executive producer said you want to see

it. it was kind of look a baby. no, i don't want to see that thing. when it comes out i'll take a hard look at it and i didn't see the birthing process which i, frankly, don't miss. >> i don't know where the rats went. they fled to another part of the building, but the rats are gone and now the roaches -- they're missing. >> i like the blue. i like the blue. >> it's modern. >> calming influence? >> how about the terrible plywood? no offense to louisiana pacific because they make a great stramborn. >> the sound board is the same. you might introduce new sounds, but not for now. >> not yet. >> boy, i could use some anti-shine in that picture, but, you know, some things are new and needed and that's -- by the way, that's mr. fall from kimberly-clark on the screen, and i just am so thrilled that the network aftopened its pursed

gave us a new set. >> let's get to phil lebeau. breaking news on boeing. >> there is a report out of the capital of ethiopia, saying ethiopian airlines is the -- the faa has not lifted the grounding with airworthiness directive. we expect it to happen today, tomorrow or maybe friday, but relatively soon. ethiopian airlines saying it will be the first post-grounding flight to kenya. this is what we'll be seeing over the next couple of weeks. once the grounding is lifted, the companies that have the dream liners and they're fixed will go back into service. >> everyone doubted them just like novak. people should stop doubting good ceos that know how to deliver. >> we will get six in 60 after a break. [ male announcer ] here at optionsxpress, our clients really seem

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we talk about apple all of the time. especially today. it's only the biggest dividend payer in the world. >> people love dividends. you put a floor on it with the downgrades and that doesn't mean it can ramp. >> it has gone positive.

>> 420 is the key level. >> let's get six in 60. we'll begin, jim, with juniper. >> wow! another miss. people are going give up here, frankly. >> edward life sciences disappoints. >> they're not getting enough procedures. tom falk from kimberly said fewer people are having operations and it's a nutty thing. >> credit suisse says they'll be good. >> people are going away from these stocks in part because of amgen and procter. >> panera, you mentioned them earlier in the show. >> same-store sales will be tough. don't give up on this company, the sales are really good here. >> cash is in a bit. >> they had an 11.5% piece of paper. thank you, ben bernanke for saving realgy. >> this is one, the drugs are not in favor today, and this was a good quarter and not today,

and it will be good tomorrow. >> tonight on "mad." we have comings and goings. we have rick goings, ceo of tupperware and cummins having an engine that uses natural gas. he may have a good, so it's goings and cummins. >> we'll see you tonight, jim. >> simon hobbs here with a look at what's coming up in the next hour. >> good morning to you, carl. the biggest share buyback in corporate history and for apple stock, we'll pitch a shareholder against an analyst and the ceo of broadcom will be here to talk about its results and can the banks grow? can the banks return their cost of capital. the former cfo of citigroup sally krawcheck will will be on in the second hour of "squawk on the street" this wednesday morning. ♪

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for the next hour of "squawk on

the street." we will begin with apple, despite numerous price target cuts. a stock going between positive and negative territory. it's digesting the gross margin climbs and the guidance. have we reached the bottom for the tech titan? >> the slew already beating the street this morning. so are we setting up for another leg higher on the markets and what about that move on gold? merrill lynch's mary ann bartels will give us her take. >> and today we have the first annual meeting for ceo michael corbat and we'll get analysis from the former cfo of citi, sally krawcheck. >> first we'll kick things off with apple and the shares are trading up a bit this morning after initially selling off after it beat the streets estimates for its second quarter and raised the dividend by 14% and increased its stock buyback enormously and still we're talking about the company that's

seen shares down 35% is the massive return of capital allocation still not enough to turn the tide for investors. >> managing director at cmp securities and senior vice president with brynnmore trust. let me go to you, mr. cobb. as an apple shareholder, what do you make of the quarter and the conference call and concern that perhaps there will not be any new products for quite some time? >> well, i think there's actually more positives coming out of this than negatives. >> the positives you need to take is that you've got a company right now that needs to manage expectations. >> this is the first time we've seen in this a long time about managing those expectations. the analysts out there have had this hyperbell onic growth rate out there for the last decade or so and i think it is now time to rein that in. you mentioned the dividend and the buyback program and i think

that's a huge positive, but the stock clearly has changed from growth to value and absolutely you look at it from a fundamental perspective. it's trading at nine times and down 35% from its peak and, you know, you look at the dividend plus the balance sheet ask it might be a decent entry point if you have the time horizon ask you have the absolute, you know, mindset that this is a business. this is -- we're not investing it for the stock. we're investing it for the business and we want to own it for the full market cycle. >> right. alex, i just heard chips are trading at five times and maybe when you back out cash, but regardless, there are some who dispute that multiple. it is low, but perhaps not that low because they're wondering what the success half of the year will look like. who what is your take given the second quarter and the comments on the conference call. >> you're right. it is tough to figure out what the growth multiple is, so, yes,

the dividend yield at this level is very attractive, but the erosion on the fundamentals is attractive and once upon a time the wintell consortium really put this stock on its back for more than a decade and we're seeing it happen with alternatives and we've seen apple move away from samsung and as a consequence, gross margins are, roding and one of the problems is yes, apple is managing to lower growth expect akres but it's doing so because it is now suddenly losing share. the smartphone market is not saturated, but apple is now losing out to more diverse and better priced alternatives. >> so is the solution finding another angle of which to attack the smartphone business or is it about another business entirely? is it about some other form of

media? is it about tv or is it about radio or some other derivative thereof? >> david, for this stock at this juncture it's still about both because even though it's gotten much cheaper it's still a massive market cap supporting massive valuations. so it needs to broaden its iphone product line. it needs a more affordable product, and i know tim cook disputed this on the conference call, but it needs a larger screen option for that market, as well. a premium version and a no-compromised version and it needs a revolution and it does come from something like apple tv or on the software side and if you look back recently the software moves have not been that inspirational. sir i was a disappointment and maps was a disappointment and maps was in a show-me mode in the ability to turn this thing around. >> so, chip, how do you think tim cook feels today? last night he goes on the conference call and announces the biggest buyback in history $50 billion on top of what is on the cards first dividend and 13%

of outstanding stock and he walks into work today and he sees the stock has barely moved despite all of the pressure. what do you think hes to his cfo? we could have spent that on rnd? >> i think he says the same thing he said the day before which is we're here to manage the business ask we're not here to manage the stock for today, but clearly, the fact that they're adding -- they're deploying this cash is a huge step in the right direction, but they're there to manage the business. they have great vision. they have great innovation. >> it's a step in the right direction for who? if your main objective is to innovate and everybody comes back to this today. it's all about the product. it's all about the product range. is that is your main name, why return so much cash now? why not spend that on rnd and selling stuff in emerging markets? >> they probably are going to be spending money on rnd, but the point is that's a step in the right direction for a shareholder, but as a business owner and as the person that is

running a business their job is to continue to look for product innovation. that's their job. i clearly think that his -- if steve jobs was still in lace ask he was still among us, he'd be more tight-lipped than tim cook is, and i commend tim cook for being as open as he's been. we look for the next several quarters to be choppy, but fast forward into this year and the beginning of next year. >> you have a much larger position in the stock not that long ago. didn't you cut it by almost half. >> we definitely did not cut it in half. 20,000 shares and owned 39,000 at the end of last year which would be rough. i'm sorry. i interrupted you. go ahead, alex, you had a resons? >> i can't help, but agree with

simon here. i think what they've done on the capital return front is a little bit too much too fast. it smacks of desperation. i'd rather see more going into the innovation side rather than them trying to buy their 14s at this juncture. i think fall is too late for product refreshes and if tim cook's job wasn't in jeopardy prior to the earnings call i think there will be more scrutiny call because i did not like the tone that came out of this conference call. >> you really think there could be pressure him? isn't it a little bit soon? i don't know about that board, but they have some strong voices on the board, but you always have to start thinking about composition of boards when you start talking about things like that. >> no, i know. it's intensified to such a degree that apple's got to get answers more quickly than it appears to be producing and management is a key function in that and we do know that morale internally at apple is very much on the rocks right now. so that does need to get turned

around and the employees need to be inspired and the customers need to be inspired and not apologize to. that's not the right answer. i appreciate both your insights and thanks -- let's turn our attention to the markets and a slew of strong earnings and we are flat to negative on the session so far. volatility has flooded back to the market and we saw that big time last week and of course, what happened yesterday. >> let's bring in mary ann bartels and cio with merrill lynch wealth management. welcome to the program, mary. >> thank you for having me, simon. >> i'm assuming with that position you're upbeat on earnings, aren't you? >> the firm introduced 1600 last year and we maintained that target and we are saying it may not be a straight line to 1600 and we may see some choppiness and we're seeing that now due to slower growth in europe and china, but we are recommending to our clients on any market

pullback that they should be adding to equities. and what should they buy in that instance? do they go into the defensive stocks that have done so incredibly well so far this year or should they be more brave? technology, cyclicals? >> you know, it is very interesting because the first quarter was so strong and when you look at the sectors that outperformed there were health care staples and utilities and everyone is classifying them as defensive and when you look at an underlying them they all have yield. so what the market is telling you is that the investor base is still seeking yield as we still have a very low interest rate environment and as the federal reserve keeps telling us that they're going to maintain a low interest rate environment. >> i think i want you to make a judgement. what do you think people should do? >> well, we really like mega-caps. we like growth stocks and select cyclicals. so we really like a well-diversified portfolio of

stocks here. >> okay, mary, let's talk about gold. clearly, we had a very rough couple of days in the end of the week before last and into monday we lost 13% as everybody is aware over that two-day period. once in a generational move. since then, of course, what's been remarkable is the physical buying of gold and indeed some gold coins at the u.s. mint have actually sold out and in emerging markets, the physical buying of gold continues. where are you on this investment? right now we're recommending that investors hold off on purchases and our analysts do see risks down into the 1200 range, but when we look at it in terms of a portfolio contact, we still view gold as a diversifying asset and on these pullbacks f our clients have not purchased gold we do recommend they buy on the pullback, if they want to have

diversification on their portfolio, we're maintaining they have that position. >> you could have said that for the last ten years. >> does the move not matter that you get that sudden move down? is it that gapping, that air pocket in the broad run of things. is that not relevant in your view? it doesn't change anybody's view? >> when you look at what gold's done it's up 500%, simon and we've only had two 20% pullbacks and now we're getting a 30% pullback. so when you look at the entire gain if gold since 2002. we are starting to see more volatility build up in gold. where the demand has been rising is from the financial community especially with the innovation of exchange-traded funds or etfs. the growth in financial investment is up over 300% since 2002. now our analysts are still forecasting that jewelry demand

will remain very strong, particularly out of asia and we're also seeing central banks continue to buy gold, particularly the emerging markets. so the short-term we still expect a lot of volatility, but in the longer term we still see longer term demand for gold. >> but on the central question of the money that moved out of the etfs, mary ann. do you feel that there has been a sea change there. >> the last time commodities in gold were in the 1970s and in the 1970s, individual investors had a difficult time accessing gold. they would have to buy physical gold or coins. in today's environment i can access gold in a cost effective pressure -- >> what happened in the last two days, is that a sea change? >> i don't think that's a sea change. no. >> thank you very much. mary ann bartels joining us from

merrill lynch. have a great day. >> when we come back we'll keep the heat on one of the top suppliers is here to weigh in on their quarter and we'll find out how much market share broadcom is gaining for the smartphone boom. scott mcgregor will join us for an exclusive next. citi hosting its annual shareholder meeting today and who better to speak on the headlines than the cfo, sallie krawcheck. she will join us in a bit.

the street may not have liked apple's numbers, but they did like the numbers from the supplier of broadcom. the tablets and handset parts increased and joining us now for a cnbc exclusive broadcom's president and ceo, scott from palo alto. good morning. >> good to be on the show. thanks. >> the stock's having a heck of a day. up almost 7%. people were worried about this space and i wonder if this dwarty of yours that maybe the worries were unfounded. >> we did have a great quarter and it was better than expected driven by a number of

innovations, 5g wi-fi and new base bands all going into smartphones around the world. >> how much of those are happening now and are less locally to act as drivers for the second half. is the pipeline getting richer as we go into the later part of theior or not? >> the pipeline is definitely getting richer. we have pipelines coming out for the end of this year and lte coming out next year. there are interesting thing, nfc that will allow you to do payments and we have a lot of things coming out in the next year. >> you mentioned 5g wi-fi. can you explain to people who aren't experts in technology why that's so important. >> you have a wireless land in your phone to get information and things like that. imagine if it had twice the range, went three times as fast and used your battery much less. so your battery lasts a lot longer. that's the kind of thing that it

does. it enables you to do video and all kinds of things to use less battery at the same time and those are the innovations we're driving. >> for the lay investor, the thing they're most exposed to is the launch of a new phone. something we're talking about a lot with regards to apple and a big review of the samsung and the galaxy in the journal today. how much of those are drivers for you this quarter and in the coming quarters? >> they're very important for us. broadcom is in almost every cool new smartphone that's come out. we provide the connectivity pieces and we provide things like touch and communications and all kinds of other new technologies that are coming out. and new technologies like indoor location and imagine if you can get inside a shopping mall just like you do in the outdoors now or on the streets. those are the kind of new technologies that drive us. and again, we're in most of the cooler smartphones that are coming out. >> good morning, mr. mcgregor.

it's simon hobbs. if you look at apple, innovation is key. if you look at you, innovation is key. qualcomm racing against intel and we kind of know the story. in that environment, how do you feel about the decision that was made with apple to have such a very big buyback to use cash equivalent to 13% of your equity to buy back stock. is that the type of thing that you guys tend to like to do if you want innovative space or do you feel pushed into it because of where the market is? your stock in particular hasn't done very well over the last year. >> broadcom's innovation is our lifeblood. so we look at cash. we obviously want to run the business, but our primary use of cash is to acquire new technologies and new teams that help us drive forward and we drive through dividends and they're our uses of cash through broadcom.

>> do you feel the environment in which you operate the strains of being ceo are different now that you have to satisfy an equity market that is very focused on some sort of dividend return. >> it's a challenge. you have to satisfy your customers and you have to make sure your employees are inspired and you have to give a good return to shareholders. broadcom right now is making significant investments that we think will catapult us to the lead in smartphones. we want to fill in the rest of those, and i think it will create a good return on that investment going forward. >> there was some discussion on the call regarding margins which i guess there might be some downside risk to them in the coming quarters and some discussion about mix. can you be more specific? >> we forecast margins to decline a little bit in the next quarter and part of that's a very aggressive pricing environment in the smartphone space and broadcom has good margins and that allows us to get a good return on that investment. >> is the declining margin

story, universal within the space or do you feel there's opportunity to see those continue to decline, as the market sorts out for who will lead in smartphones going forward. it's coming down to a fairly small number of competitors who can do that and i think broadcom's strength is no other company besides broadcom has the breadth of i.p. all of the connect kifity and all of the last mile technologies, video, touch, all of those different technologies go together and create that cell phone experience and we want to be that one-stop shop for our customers who want to come and get that. >> just before we let you go, what are you seeing now in china. i know broadcom communications has lower shipments. is the dynamic changing there? >> china is a great market and for us, it's been a var rapidly growing mark and we expect it to grow for us over the first of

this year and broadcom is a leading provider for technology for the infrastructure in china and everything from the he end to broadband deployment and cable devices and the core internet which china is deploying at an extremely rapid rate. a great market for us and we expect to grow share there and we expect the it to grow this year. >> scott, congratulations and always good to have you on the show. thanks again, scott mcgregor of broadcom. >> apple launching a two-part plan of $100 billion to cash and shareholders. it would boost its dividend by 15%. it would be the biggest dividend payer in the world as it befits a company of this size. if having the biggest dividend and buyback can't get investors excite again. what would really get the magic back, tweet us@squawk street and

we'll air your responses throughout the morning on cnbc, david. >> still ahead we'll go behind the fallout of the fake tweet that produced yesterday's sell-off. plus what are they saying about the broader economy? you'll find out when jeff fettig drops by post 9. bny mellon combines investment management & investment servicing,

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back to a story still at the top of our radar today. yesterday courtesy of twitter, hackers of the associated press' twitter accounts and sen the dow down 140 points after saying explosions injured the president. our applon javers has the latest. >> it's a truly strange couple of minutes there yesterday and we still don't have any idea who did this. here's how it all unfolded. at about 1:07 p.m. this tweet was posted on the a.p.'s twitter feed saying breaking, two explosions in the white house and barack obama is injured. obviously, a fake tweet. the a.p. said its account was hacked, but look at the impact right away on the dow jones, talking about in three minutes' time about 143 points down and then suddenly back up again as

people realized this was a fake tweet and the a.p. made every effort to get the information out there that it had been fake and just by coincidence within about seven or eight minutes later the white house press briefing was set to begin and by tradition the a.p.'s reporter gets the first question and she had a chance to make news herself and tell everyone in the media what went on. here's how it played out. >> i want to say at the top that it appears a.p.'s twitter account has been hacked so anything that was just sent out about any incident at the white house is absolutely false and we'll be putting something out shortly to clarify if that hasn't happened already. >> thank you. the president is fine. i was just with him. >> and carl, we know that the fbi is investigating the situation. the secret service tells us it's aware of the tweet and it's monitoring developments, but still no real idea here who did this and the question is whether they can be caught at all given how easy it is to mask your

tracks on the internet with the kind of a hacking attack like this, carl. >> you know, interesting, of course, you've done so much work on this, eamon, as well as i have. on my subway ride in, somebody that works at a.p., they got a lot of fshing going on there. you never know. somebody stole a password or they were able to get one as a result of a phishing expedition, p-h is what we talk about when getting data. >> it looks like an innocuous email that might have come from somebody you even know. they might not have any indication that they were the ones who triggered this because you can click on a link. it doesn't go anywhere. and you delete it and move on and you don't have any evidence necessarily as the user that it was your computer that was hacked so it will be a lot of work for the a.p. to go through this forensically and figure out what happened and then to see if

they can trace it back to whoever the bad actor was. a lot of questions about twitter, the media and high frequency trading on the market and why is it that they're programmed to trade after one tweet. why don't they wait for some other verification before trading? >> the financial markets are becoming a complete hostage to fortune on social media. if a.p. can be hacked so can so many corporations and that will move the stock. do you think that's an issue? >> you're shaking your head like you disagree, carl, and i want to get to crude oil inventories which we're late on. threat get to sharon with those numbers. >> oil prices have been rallying here more than a dollar after the department of energy just reported that crude supplies rose by 947,000 barrels in the last week. 947,000 barrels was the increase in crude supplies over the last week and keep in mind analyst his been expecting an increase of 1.4 million barrels, and it's

less of an increase than what was expected and that was seen as somewhat bullish for the marketplace and it included a supply in the previous session and we're looking at gasoline supplies and 3.9 million barrels was the supply and much bigger than expectations and bigger than what the american petroleum institute reported last evening, as well and that was bullish for gasoline futures and we're looking at distillate fuel supplies that actually rose fractionally by 97,000 barrels and 97,000 barrels in distillate fuel supplies and they're looking for a little bit of an increase there in the diesel futures number, but keep in mind, we are seeing the rally that we have in the oil market and we're still above $90 a barrel there and keep an eye there on gasoline futures and that seems to be the more bullish number and that was only for a decline of 700,000 barrels and the department of energy

reports a 4 million barrel decline in gasoline sales for the week. back to you. >> the citigroup shareholder meeting is under way and very different from last year and we'll talk to former citi cfo sallie krawcheck. plus we have an inside look -- the details a little later on on cnbc. [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just stay alive... but feel alive. the c-class is no exception.

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citigroup is hosting its annual shareholder meeting as we speak. mike corbat and kayla tausche has the very latest. has it started? >>. >> it has, simon. it started at the top of the 9:00 hour and it's been under way for an hour and a half in midtown manhattan and the very first for mike corbat in the roughly six months that he's been ceo. we're just getting out of the first proposal session. corbat made prepared remarks and they went on to commenting on the seven proposals on the table for the company. among those, of course, the election of directors and the installation of kpmg as auditor and some shareholders raised questions about that, in light of news with kpmg. they also wanted the possibility of denying insurance to executive directors in the case of certain situations, and finally, there were questions about compensation. shareholders need to approve the compensation plans for 2012.

last year that was a big issue and the shareholders said no when they were voting for say on pay. vikram pandit got shares when it fell in 2012. corbat is expected to get roughly 11.5 million and the stock has risen 20% as long as he's been ceo. he said this morning the core strategy for the bank isn't changing. that's going to be a big sticking point for shareholders when we open up the floor to the broader question and answer session which is just getting under way. expect mike mayo and outspoken equity analyst who is the shareholders to ask questions. that is what i'm told is on tap this afternoon and david, it will certainly be an interesting day at a very seminole time in its transition. >> kale a thanks. look forward for that annual meeting from citi. >> with none other than sally krawcheck. she's former president of bank of america wealth management and also was cfo of citi group some time way back.

sallie, i go way back. not that you do, but i remember when you were also a financial services analyst at sanford bernstein. a great firm that did a lot of independent work and didn't have the banking to sully things. i know you don't follow these day to day and minute by minute. with those huge reports, give me your big picture take on the banking industry these days in the u.s. in terms of its competitiveness and where it's headed. i would take a step further back, i think the questions on these banks right now, there are two of them. can they grow and i'm not talking about riding the market volatility. can they grow through the cycle and can they earn their cost of capital back and what you saw this quarter as you look at these banks, is there some group of them earning single digit roes and they're destroying shareholder value every day they go to work and they need to figure out how to get those returns up consistently. >> that is the key question. goldman has passed that 10%

mark. what do they need to rely on, in your opinion then, to get to earning beyond their cost of capital? >> well, you know, the go-to strategy is cost-cutting and that's a very difficult way to become great. what company ever cut its way to greatness? what they have to do is they have to recognize a changed environment. there were some great things about it. the individual investor was coming back into the market, and there were some tough things about it. rates are low and that's not ideal with these dreams, but if you take this quarter as a pretty representative quarter of what they'll have going forward with some plusses and minuses. okay. how do you grow in this environment? you can cut costs so far, but can you innovate? is there a better job you can do for customers and clients and of course, the history here, quite frankly is that what many industry observers and industry participants and regulators and everybody thought was growth

before and innovation before was actually increased risk wrapped in complexity, riding volatility. >> is there a feeling that capital is vifrrtually free and there's a boom in debt and that it is easier that they're making it look? >> that's the point, isn't it? there are plusses and minuses, but this quarter we had the ability to catch our breath. there are no excuses anymore. it's not, oh, we have a crisis going on. how do you earn that cost of capital in a pretty good environment and the answer is it's not increasing leverage. and we can't owner our r.o.e., and let's go back to business school 101. you are allowed to earn roe when the earnings come down. you don't just have to increase your leverage and all of that being said, can you get those returns? >> right. >> the cost of capital for the

very big banks is obviously higher than it is for the smaller banks or for the opportunistic ones that will come into the market and therefore, doesn't the low-hanging fruit continuously get picked away from the very big names or is the franchise so big that the leveraging is the be all and end all? >> i'm sighing because we can have cost of capital and it should be big banks and small banks and there are those that argue that the too big to fail very much lowers that cost of capital, but i think the overall point is a good one which is you have smaller institutions and a lot of start-ups that without having as much process and built-up practices and dare i say bureaucracy and dare i say regulation on top of regulation that these guys are working to innovate and taking what was the little crumbs that fall off the table, but now are sort of pieces of bread and every once in a while a hunk of meat as well. and you work for some of those. i am consulting with a number of

the start-ups and it's been a fascinating, fascinating experience. back to the bigger picture view because i hear you saying this although i don't want to put words in your mouth. lack of leverage and higher capital ratios combined to keep them in this box for a long period of time until they can creep back up and not because they can innovate. >> i think we want to be careful because increasing leverage and increasing roe is a false increase. >> you were the cfo of city while that was happening. >> we've seen this so many times in so many ways and can they regain their customer and clint's trust and grow the business the old-fashioned way as opposed to increasing risk through leverage or risky products. >> thank you. good to be here, guys. >> when we come back, more on

apple's roller coaster ride. the street seeing a lot of price targets cut across the board. was the move toward more than double the capital return program not nice for investors? steve milunovich will join us in just a bit. [ male announcer ] when gloria and her financial advisor made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. when you want a financial advisor who sees the whole picture, turn to us. wells fargo advisors. we went out and asked people a simple question:

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>> today marks the grand opening of the samsung experience store within a store located within 1400 best buy and best buy mobile looks across the country. our own courtney reagan is outside the best buy outside union square. good morning, court. >> good morning to you, carl. that's right. the best buy right behind me actually just saw a very short presentation from the best buy ceo as well as the samsung electronics ceo. they gave tours of the new samsung experience shop and spoke to a small group of media to discuss a new partnership. 200 best buy looks actually already have these experience shops. there will be 1400 of them by

early june. they'll be complete with a samsung employee, a special blue shirt employee all part of best buy's renew blue campaign to reinvigorate its consumers, its employees and its vendors. the average samsung shop is 60 square feet which are in 700 best buy locations despite the fact that best buy is the biggest seller of apple products in the country. i asked jolie if there was a concern at all about the employees being able to remain brand neutral as they offer these products in these special samsung and non-samsung experience shops. this is what he had to say. >> they can highlight that the evaluation of the blue shirts is unchanged so they're not innocecentivized for a particul vendor or another and their objective is the customer satisfaction and the objective

of the store. the advice of the blue shirts continues. >> joly also said that early success shows that samsung sales are, in fact, up in these shops. customer feedback is positive. he called the real estate of best buy not an asset and vendors of samsung are starting to realize. back to you. >> the galaxy s4 rose. it's the best android ever, "usa today" an endsless bag of tricks. how the flash crash confirmed something very important to rick santelli about the yen and stimulus out of japan. it's the santelli exchange and it's coming up next on cnbc. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance

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welcome back to "squawk on the street." today for the santelli exchange we're going to do a list post mo mortum on ap's fake tweak or the two-minute flash crash. everything with move with a button. one button. you can change everything.

therefore all stimulus is fungible. many of you will point to all the very important issues. in about 30 minutes we'll talk about hlt. but i want to talk about something much more simple. at the point yesterday around 1:00 eastern you looked at stocks, of course, you saw boom you had one of these. if you look at the the euro currency against the dollar you didn't see it. if you look at the british pound, the symbol on the computers, you didn't see it. if you looked at the ozzie dollar you didn't see it. where you did see the same mat earn is any of the crosstrades. whether the euro yen, the pound yen, anything yen, you had the exact same pattern. computerized trading takes place like boom. you already missed half of it just in the snap of a finger.

so obviously there was no thought going into this. it'sing it's programmed in. the yen is now programmed into the equity algorithyms on the high computer. ha is very important. we talked about the first step was to boar owe yen at low interest rates. what is the long and short of borrowing yen? a short position. so if you really want to know what's going on in the world of stimulus, keep an eye on anything related to the yen. >> all right. thank you, mr. santelli. could have been a health class. >> what can $2.5 million buy you in apparently a nickel nowadays.

the story on the pricey piece is coming up next. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office,

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the next big thing? we're going to wake the world up. ♪ and watch, with eyes wide, as it gets to work. ♪ cisco. tomorrow starts here. might be time to shell out serious coin for an extremely rare nickel in today's million dollar minute robert frank

explains why a century old nickel is expected to sell for 50 million times its face value. >> this is the sexiest coin of all. >> sexy? rare and really expensive may make more sense. >> we think it will earn more than $2.5 million. >> why is this nickel from 1913 so pricey? >> there's only five in the entire world. >> miss liberty was the face of five-cent coining until the early 1900s when the u.s. mint decided to change it up. >> in 1913 they switched to the buffalo design. >> this coin is not supposed to exist. it's supposed to have the buffalo design. but the mint employee printed these five specimens with the 1913 date. >> don't bother digging through your closet for another 191 liberty nickel. >> the other four are known to exist.

they are in collections known to all the people in the coin collecting circles. >> and when the last known nickel hits the auction block, only one person on the planet can take it home. >> i can see buying a nice car. but a nickel? >> this coin has an amazing history. it was purchased in the 1940s by a collector for $3,750. he was then in a car crash in 1962. he died. it was a fiery car crash. but the coin that was with him survived. police gai it to his family. they said it was a fake. so it sat in a closet for 40 years. in 2003 it was authenticated and the family is now putting it up for sale. kind of an amazing history.

the most expensive coin ever purr chaused w purchased was $8 >> makes you think there could be more around, though. >> they know there are only five. all the others are accounted for. but you can bet with values of coins, collectibles are up 248% over ten years. there are very few of these. >> uchb times what you see, they think they have something valuable. it turns out to be worthless. weird to see something you thought was worthless. technology catches up. >> they thought it was not authentic because it has a blemish, a metal deformity under the letter. they thought somebody changed the year. these are really professional

and it's the real deal. >> and a car crash. >> the same as buying an apartment in new york city. >> probably similar return. wan to quickly get to a couple of movers that are moving down. we have a mixed market. it is worth noting the most widely held issues. we talked about at&t earlier. wireless margins not bad. but the overall revenue number gives people concern. we have the same story. ef earlier on "squawk box." they lowered the guidance a hair below the top of the guidance for the street. that's concern also. three of the larger companies

out there all up significantly in terms of percentages. at&t hasn't been down this much since may 6 oth of to 10. >> the flash crash of all days. up 6% at the lows. it's hard to poouf a name that big that much. thanks rgs guys. we'll see you in a few minutes from europe. if you're just joining us, here's what you missed earlier on. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> we increased our dividends 7%, making this the 52nd year of dividend increase. and we slightly improved our fiscal year core earnings per share guidance. >> the reality is there is a lot of money coming into the markets. it's is so far been very u.s. focused. the rally is very different from the united states than it does from anywhere else. >> what do you think another ceo would do if cook was out and anybody else was in.

you name it. >> they would go social, mobile and cloud and make a series of noisy acquisitions that would change the course of apple. >> apple is better than treasuries. now you've heard it. rigt in your face. >> you and a lot of people. >> when you look at the entire gain in gold since 2002, having a 30% pullback is minor. >> we are making investments that we think will catapult us to the lead in smart phones. i think it's going to create a good return on the investment going forward. >> good wednesday morning. we're live here at the new york stock exchange.

let's check on the the markets. dow is down about seven points. a lot of big names in earnings today. s&p is up a little less than two points. nasdaq is up barely four points. after earnings did top expectations. also reiterating earnings forecast for the rest of the year. apple as you know is announcing a historic stock byeback. streets still not that happy. six different firms lowering estimates. what does the company need to do to get back on board. they came up a bit short on revenue. the company ceo will join us with his first reaction to the quarter. having trouble trusting your lawyer? there is an app for that. they are taking the start-up

world by storm. hear what they have to say about the the company. but of course we'll start with apple. the tech giant planning to share more than its cash pile of $100 billion, returned to shareholders by the end of 2013. all of that is still not enough for investors. the question is what will it take to push the stock price back to where it was once? steve milanovich is an analyst. that was 550 not that long ago, steve. you say returning capital big time in your words. why the target cut? >> well, the earnings numbers are going down. when you think about it, it's amazing that the companies indicated they're going to buy back 15% of the outstanding and the stock is down. it tells you how worried they are about the product decline. >> when he talks about

introducing products for 2014, is this typical? mike refers to it as the pension for being coy. are they still trying to keep everything close to the vest or do they not have a lot to offer in the near term? >> that's the $64,000 question. i asked him about the timing. he reiterated a lot to do with fall and 2014. the september quarter will look a lot like the june quarter. that's very disappointing to investors. on the other hand, some of our analysts in asia are still hearing that production is moving to june on the 5s. they are being coy. maybe it will come sooner. the assumption is you will not see a lot until fall. >>. >> you basically droib adescrib

an investing model that doesn't read apple. >> it sort of falls in the crack. # they have a high price on the the book value and a lot of standard screens you would have for core value investors not really there. i think the return of capital is going to help them. it is starting to surface on the dividend and buy-back screens. you would imagine. >> you would hope so. it's been in the process since september of people thinking it was the stock that mattered in the market. it's now just another stock. >> steve, 390 is essentially the most recent low, is that a broken fever? >> i think we're pretty close. with the buyback i would think there's maybe 10% downside. not much beyond that. the shareholder yield, if you

will is about 8%. so you're getting kind of paid that way. and the new products represent option value. it's premature to say apple can't innovate. people want to see the products and see that it still has magic. >> we all know the story of his relationship to the company. a green light spokesman. we applaud apple's decision to borrow money and return excess capital al. this demonstrates the conviction of apple's management and board in the company's future. what do you think? does this take another risk off of the table? >> it takes the risk of activism and people had to figure out that $140 billion, there's nothing that can be done with

it. it's more risk than reward. buying back stocks, having a more efficient balance is absolutely progress at this stage. >> steve, you mentioned 10% downside. 20% upside. do you try to get in ahead of the developer conference and is that a catalyst of any magnitude this summer? >> it might be a mild catalyst. it sounds like they're having difficulties with that. so my senses are kind of tempering the expectations for that conference. i wouldn't feel a strong need to get in. if you can look past the one to two quarters there's still good upside. to apple's credit. it took cisco and many companies years to recognize they were slower growth than they would have been. at least they are giving that cash back to shareholders relatively quickly compared to what other companies have done historically. >> final question, michael. a lot of discussion about where they are on the life cycle.

growth, value, value trap. trying to look at it as broad as you can, how are they? >> i think it's too early to say. they may be in a lull here. we trail wrote them off before preiphone and preipod and all the rest of it. i agree the story of apple has been at an accelerated pace. they haven't required ten years to come to terms with the reality right now. steve, michael, i can't think of two guests i would rather have talking about it. thanks for your time. >> thank you. >> got breaking news on hedge fund manager john paulson. and we go to kate. >> john paulson is speaking to investors with a review of his first-quarter performance and a little bit of outlook of the year to come. this is taking place as we speak. just got underway at 11:00. i'm told paulson is likely to flag his strong performance in a first quarter. buoyed by mma stories.

and that's been a great holding for him so far this year. he is the company's largest investor. he voted with t-mobile. that's been up 10%, and there are other situations they'll be talking about. they feel bullish. they think it's something that tends to recover as the economy recovers. we've seen strong deal making. they'll be very involved in the situations indeed. they are trying to recast themselves as an mma specialist, being their historic strategy, the thing that founded the firm in '94 even though they're so well known for credit and trades. now paulson is very involved in gold. they, of course, have taken a beating of late. it's the single worst fund in the company. the gold fund is down almost 30% through the first quarter. i'm told they're still going to

sound a bullish goal to the long-term. they essentially see it as a currency rather than a commodity. something to gain in value over the the coming years as new money supplies make their way into the lending community. so that is something to watch. the other thing to know is they got in at less than $1,000 per ounce. they're still at pretty decent shape. >> where he is with relation to gold is one of the burning questions on the the street. don't need to tell you that. thanks so much. kate kelly on john paulson. getting back to apple, we have a different take. now, seema, the whole bond issue. >> the rumors started last night when ceo tom cook said we are increasing the dividend by 15% to further appeal to investors taking yield and we will access the debt market. but with apple sitting on now more than $140 billion in cash,

why would it raise debt to fund the enhanced capital allocation program? joel is telling me a significant chunk of apple's cash is parked overseas, making the economics unattractive to use towards repurchases. bringing the cash that is sitting overseas back into the u.s. would require apple to pay a high tax rate. and issuing debt would lower the cost of capitol and it's a good time to issue debt with rates at an all time low. the credit rating agency s&p gave apple a double rating with a stable outlook. apple now has the same rating as the u.s. government. an apple bond would be well received by the street. bondholders have accepted microsoft and google issuance. even another analyst, carl, pointing out these days it's hard to find companies or countries with high ratings so

perhaps if apple goes forward with issuing a bond it may be well received by the street. >> a lot of people discussing if you don't like the stock if you would go ahead and buy an apple bond. seema, thank you. and whirlpool is falling today after first quarter sales did disappoint the street. we'll get the ceo's reaction to the numbers when jeff fetting joins us after the break. >> hey, rick. >> absolutely. we're going to hit it from another angle. we're going to talk to an expert. joe will be coming up in about ten minutes. we'll discuss things like regulatory capture. does it create a vacuum that causes the opposite effect? listen, i have no flesh in the game. we're going to hit it hard and honest and you want to be there in ten minutes.

let's take a look at technology this morning. slightly positive today but some big losers could force it into the red. >> check out juniper networks. an ugly session. networking equipment maker forecast second-quarter profit below what the street wanted to speed. is problem is weak spending as well as the financial services sector.

that stock is down some 9.5% right now. down about 20% this year. carl, back to you. >> thanks a lot, josh lipton back at headquarters. and whirlpool is trading lower after first quarter earnings beat estimates but revenue did miss. shares had a 52-week high questioned. up 70% over the last year. here is jeff fettig, the chairman and ceo of whirlpool. jeff, it's always good to have you. welcome back. >> carl, thanks for having me. >> we're told every day that housing is some o sort of big economic tail wind, at least here in north america, that it's booming in certain markets, doing great in others and it's hard to get anything beyond flat. what is going on? >> well, carl, first of all, housinging is really off to a great, positive trend in the u.s. we have seen, you know, really for the last several quarters

very good double-digit inkroess in our new housing marketplace. existing home sales are up very strong double digit versus a year ago. so we're very bullish on housing. i think in the case of whilpool in our position, those two sectors together make up 30% of the marketplace. we're strongly representing in new trux. we actually ship our products when houses are completed. we're expecting hour housing shipments to continue to ramp up strongly the throughout the year. but again they make up a smaller piece of the marketplace. if you step back and look at the global marketplace for demand i would say that the demand and the scenario has not changed in the first quarter. it's similar to what we saw.

so the housing story is real. we think it has a long way to go. but it's a small part. >> you do reference some impruf proving sprends internationally, right? >> yeah. we think we have seen the worst of the worst. europe was slightly down. latin america off a strong year ago was slightly down. we already are seeing strong improvement in those market. for us the only place we saw true growth was in china. >> pricing in north america, i wonder what the consumer is willing to pay for here and if we strip out the new construction element, renovations, people trying to upgrade the machine, the washer we already have, how much pent up demand is in there? how much pricing power is in there? >> we think there's a lot of pent up demand. the market is still 20% of what

it was in 2007. and we have seen for now a couple of things. new production innovation is selling extraordinarily well. so in terms of -- i would call mixed power, our ability to sell with better margins on innovation has been as strong as it's ever been. you know, the absolute pricing, you know, there is value at any price level for the consumers in the market today. so depending on a consumer situation, if value by itself is the critical factor, they will buy a low price point product with less features. but where our strength is in selling branded mix with new innovation. and that's going very well. >> finally, jeff, a story for the broad market for the past couple of weeks has been the decline in the price of resource metals and precious metals. we continue to see forecasts for energy costs coming down. inputs going to get easier in

the second half? certainly the sentiment in the last few weeks in terms of stabilization has been there. you've seen it in the prices of things. you know, today we indicated that it is trending towards a more positive level than we gave in our guidance. but i would still say it's up year over year. so the trend is good, but the absolute number is still inflation. >> jeff, it's always good to have your set of eyes on the show. people look to what you're seeing with a lot of interest. thanks so much. >> well, thank you, carl. >> jeff fettig, the ceo and chairman of whirlpool joining us. and come up, how viewabill is doing when jooek comes back. [ male announcer ] it's simple physics...

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let's get to rick santelli in chicago with a critique, it says, after high frequency trading from the big plunge we saw yesterday. >> i think it's going to be a critical critique. and before we get to our guest i was to read the definition of regulatory capture that's online. regulatory capture occurs when a regulatory agency created to act in a public interest and instead advances the concern of interest groups that dominate the industry or sector it is charged with regulating. seriously, folks, does that not sound like it was written for f hrk t. joe, welcome. thanks for being my guest today. >> rick, great to see you. >> listen, you just heard me read that definition. but in your words as an expert i would like you to hit all the issues regarding yesterday's kind of flash crash regarding, you know, how regulators may or may not affect the situation in the future.

how exchanges favorite customers are fht. do you see this stuff changing any time soon? >> no, rick. yesterday was another example. it was an example of the flash crash that we had a couple of years ago. we have all the diverse pools of liquidity that are real shallow. all owned by for-profit organizations like you mentioned. so what happens is the liquidity centers get pierced easily because there's all types of -- you know, we used to have a market with deep liquidity, different types of investors. now it's the same trader and a lot of scalpers. we're seeing these flash crashes constantly and it's due to the structure. there is no doubt in our mind that the market structure that we developed over the last 15 years which was basically started by the sec in the mid 90s has created this type of situation. >> see now the issue i see is i

don't always like to look to government and regulators to fission issues. tell me if i'm naive. if people avoid the marketplace because think think it's a high-speed casino and they don't have a fair chance. will that in a free market society force changes, or am i being naive? >> no, the exchanges are getting their volume from other players. they're still making their money. they should be called data exchanges. most of it is coming from market data services. the retail has been drowned u out by the bigger players which are the exchange's bred and butter which happens to be high frequency traders. only 4% of the overflow is coming from institutions now which makes you think, where is it all coming from? it's volume that is fickle. it comes and goes. yesterday was a perfect example of market makers are, as they

are called nowadays, who are proprietary traders competing with custom order flows. that first drop was mostlily caused by market makers seen in the news and getting ahead of the flow. they're trading for their own trading systems. here is where we went wrong. we need that inventory system tla we used to have. you have to bring that back. you have to encourage real liquidity back into the system. >> all right. i'm going to ask you one final question. we're out of time. do you think the world was better off before all these exchanges went public? maybe much of this wouldn't have happened. am i right or am i wrong? >> we were much better off than when we were mutual organizations, when they didn't have a conflict of interest. >> thank you, i want you to come

back as you find out more information yesterday about 1:05 eastern. carl, back to you. >> we're all waiting for more clarity on what was all about. bell is about to sound across europe. we'll get the close and impact on the afternoon session in just a moment. but i wondered what a i tcustomer thought? is great, hi nia... nice to meet you nia, i'm mike. what do you drive? i have a ford explorer, i love my car. and you're treating it well? yes i am. there are a lot of places you could take your explorer for service, why do you bring it back to the ford dealership? they specifically work on fords. it seems to me like the best care. and it's equal or less money, so it's a value for me.

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let's bring in simon to make some sense of that map which is

noticeably green. >> notably green. the economic situation is continuing to detoor yor rate and momentum growth towards rate cut one week ago tomorrow. today they announced loans and businesses plummeted in the fifth quarter and german business sentiment fell again today. so silent opposition shut down the line. so remember, we gained 3% on the markets yesterday on the exact same reasoning. so it's the fourth day of gains. don't get the wrong impression. europe is doing well again here today where we're not doing so well in the united states. you're basically bouncing along the flat lines with the gains that we had today. i should mention the mining stocks came back as the base metal stabilized. there you go. look at those figures there. you continue to get this rally

on europe today bringing borrowing costs down for the likes of italy and spain to historic lows. just take in the detail of that if you would, you could argue, and some people are arguing that the market is doing the work for the ecb. there's no need for the ecb to cut rates. it would only have a marginal effect when that's what the market rates are doing anyway. that's what opponents of the cut. one reason why we're rallying. one reason the yields are lower is in italy the president has announced he is asking one of the leaders there to form or to attempt to form a new government. he has to have a vote of confidence through parliament.

if he does that he will be one of the youngest leaders. as you notice the policemen are getting younger and then you notice the free men of the west are getting younger. >> pilots, dentists, doctors and now prime mi simon, thanks. stocks, of course, are mixd this morning. roughly 21% of companies reported for the quarter. the big question is where do we do go from here? scott red is the senior equity strategist at wells far go. he joins us from st. louis. scott, welcome back. >> thanks, carl. >> goldman has a note out about whether or not you do sell in may, and there's a debate in me about whether the seasonality that we all expect is going to happen. what is your take? >> well, you know, statistic, carl, that works. but my job with retail investors

is to try to keep them in the market, in the right sectors and be looking further out than the next five months. even though we're in the bottom end of the range and we think the market will close in the end of the year. i'm hoping for some pullbacks. but we have a lot of clients with money on the sidelines. i think they need to stay invested. i don't think we're going o have pull backs here. i look at that as an opportunity an we want our clients taking advantage of that if it happens. and the to get in the market here. even though we have run up,'re up 10% year to date, this market is not expensive. >> i was going to ask you about whether or not, let's say we continue to climb and just grind higher, you do not see defensive stocks continuing to outperform for the balance of the year. >> i tell you, i've been really

surprised. we have not been positioned for the defensive stocks to outperform like they have. it's very rare when you look at the run the market has been on since the november lows and had the defensives leading the charge. that doesn't happen very often. i think from now until the end of the year that is not what is going to happen. you will see the discretionary sector, materials, technology, but you need better news and more confidence coming out of these emerging markets for some of those to do better. certainly materials and technology. so i think from now on those are going to do better. we don't want our clients being defensive. clearly those are by far the best performing sectors year to date. >> pmi out of china and germany weren't great. durables this morning weren't great. what would make you want to take a flier onto caterpillar when it's as easy to go into heinz?

>> that's so unusual that you would say that when the market is running like this. and there's a lot of -- the search for yield is certainly there. there's certainly more safety in hienz. but i don't think when i look out over the next year or two years to this those will be the outperformers. these rates are not going to move up much. but the global recovery is going to pick up a little steam going into 2014. our economy is going to be better this year. so i think this is where to be from here on out. >> finally, scott, i wonder -- you know, we haven't come up with a name for it yet. whatever happened yesterday. the 1% drop in the middle of the day because of a hacked tweet. are clients responding to that? do you think there will be a

hesitance to get into the market? >> i started on the floor at the exchange in 1980. so over 30 plus years i can't tell you how many times headlines have come out on whatever news service and st tok market reacts violently like that. you can't avoid it. i don't care if there are market makers in there. everybody is going step away when they think barack obama is hurt in a white house explosion. nobody is stepping on that freight train. they're all backing up. it's humans in their trading and they're going to react to news like that and bad news like that, everybody with a bid is going to step back. >> yeah, a lot of traders, i'm sure, were grateful they were not on their computer. >> absolutely. absolutely. o that stuff is not going to go away. it's going to keep happening.

hopefully not very frequently. >> scott, thanks so much. good to see you as always. pisani is on the the floor this morning. hello, bob. >> you're right about the numbers not being very good. europe is up with lousy pmi numbers to talk about. austerity is on the outs. new italian president dealing with things. look what is happening here. the risk on is sort of up. material stocks. energy stocks. financials, leading the market today. despite what we see with the economic numbers overall. i want to point out a real important trend on earnings. most are still beating on the top line the misses have been notable this morning. and you are getting hurt badly. here are companies. at&t, proctor and gamble, ethan allen, whirlpool. see what happens when you miss on the revenues? you get hurt badly. look at the trend here. while most are beating on the

top line, 69% are beating on earnings. look at this. 39% beating on revenues. that's terrible. it was 42% yesterday. the average historically is about 61%. that is a big story now and it's getting worse. it was bad last quarter. it's getting worse this quarter. this is the main theme that's emerging for earnings so far. meantime elsewhere in terms of earnings, some fairly decent number, at least bottom line from the housing numbers. owens corning had decent numbers. lumber liquidators knocked the cover off the top and bottom line. the stock is still trading to the upside. elsewhere, put on some other thicks. we are seeing decent moves in gaming. they had a decent report. look at that stock. that's almost a two-year high for gaming ch it's all about legalization of online gaming in new jersey. they own the borgada, 50% of that.

we don't know when, but sometimes in the next 6 to 12 months. finally good run in defense names. boeing, defense in aerospace. lockheed martin had good numbers. you can see all the stocks trading to the upside. >> thanks very much, bob pisani. when we come back trusting your lawyer. we are trying to bring that baa with an app. he will tell us how. and later the earnings squad tackling everything from boeing to zynga. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket.

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welcome to the earnings squad where we desixty the stories everyone is talking about. i'm melissa lee along with my earnings squad herb greenberg. first off, let's get to that scorecard. 21% have come in below forecast. but take a look at revenue. different story there. and this is an emerging trend here. we're down to 40% beating their revenue estimates.

overall the market is looking pretty flat here but there are stock movers driven by earnings. panera is trading lower after slightly missing estimates. they cut the full year forecast citing severe weather. a beat on profit forecast. the company is looking to touch screen pcs down the line. and young brand, a beat there despite a 20% drop in china sales. the lack of more bad news in china had traders breathing a s sigh of relief. the company is maintaining the guidance for full year gold production and the stock is up this morning. when you look at the bear market that's happening in gold the concern had been the cost to mine gold. and important here out of the bear earnings release is they cut their all-in cash cost for producing gold from 950 to 1050. that relieves a bit of pressure when you're taking a look at gold prices down 20% from their

peaks. >> it's interesting because jim grant was on yesterday on "closing bell." and he's a big bull in gold. he said the fundamentals he believes are really not there. >> and he is the one wall street is most concerned about. some analysts are saying at $1400 an ounce they could face a one-notch downgrade to the credit. it used to be the biggest until gold core took over. the lower price of gold is pressuring them. that was a big concern there. meanwhile, we have to talk about amgen here. sales are plummeting. seema, you're watching this one. >> that's right. revenue came in light. one of the top selling drugs came at $1.4 billion. much below street expectations. this is a kick squn off off to

earnings. so that is a concern on the street. but keep in mind historically we do see price increases at the beginning of the year so you do have pharmacies stock up on drugs. and historically speaking they're sometimes light. >> and when you look at the company historically this wasn't off the sales. this is just the opposite direction. it seems to be they're trying to control it with cost. the pipeline, by the way. >> strong pipeline. they have a couple of drugs in cholesterol as well as cancer that will get approval late this year. early next year. >> the question here as well is the large numbers, the biggest out there and so with growth here and it looks flat in terms of sales, are the large numbers hitting amgen? that's a big concern here. the stock has been on a tear in the wall. meantime, herb, you've been as

always really actively tweeting this morning and something's really got your goat. >> no, i like looking at the industrial company ls. i love looking at what they say. let's look at some of the tweets. industrial markets uneven around the persistent. grace, economic environment, more challenging than we had planned. and ethan allen whose conference call is going on as we speak now. lots of excuses, easter, passover, sandy. but this nugget i found intriguing, lower shipments to our retailer in china. this has always been a pride -- >> international sales. >> they're made in the u.s. and sell to china. on the call just now, the ceo said, you know, these chinese companies, the chinese recently had accumulated inventory, that was planned and unplanned, very interesting choice of words. in anticipation of higher sales and opening more stores. that hasn't happened so far. is that saying something about china or saying something about the business model of ethan allen as it pertains to china. >> yeah. third quarter we should note is

the season slowest for ethan allen. weren't expecting too much by way of strength. but you've got to -- fair disclosure here, spend a lot of money at ethan allen. >> they loss -- didn't make it this quarter. >> spending money on ethan allen personally through purchases. >> that's right. through purchases of furniture. we didn't buy any furniture this past quarter or quarter before. that's definitely hurt them. >> yeah. and also the context of this, of course, ethan allen stock up 24% year-to-date riding the whole housing trend. it's been doing pretty well. >> and they have been squeezing costs. paying a lot of attention -- >> and the housing market continues to improve. will this be a play on that. >> right, exactly. that's the earnings report this morning of the if you want to join the conversation, tweet us #earning. now back to post nine and carl with more "squawk on the street." >> all right, melissa, thank you so much. outspoken bank analysts holding a meeting today. kayla, take it away. >> hey, carl. nothing has been off limits for the last two hours as

shareholders have been grilling chairman micro kneel, a new ceo at the annual meeting. among those shareholders, surprisingly, mike mayo, analyst at clsa. and now rightful owner of 100 citigroup shares. mike, thank you for being with us and a first on. this was your first meeting as a shareholder, management's first meeting. what are your impressions so far? >> well, i will tell you, mike is off to a great start but these shareholders could care less. they're talking about the decline of the stock price since the financial crisis. i was surprised at the degree of anger they have. but i thought that the "mike & mike" show worked. the interplay, i think they seemed comfortable and relaxed and were responsive to some of the questions. >> they seemed to draw a similar line on the question of bank break-ups. were asked the question in at least ten different ways, some by you. do you think they mean it when they say if our business strategy doesn't work we will

consider doing something more drastic? >> well, i was half reassured and half not. the reassuring part was, they have sold 60 businesses, $600 billion of assets. the performance of citicorp without the bad assets as improved. you saw that in the first quarter. and then you have to kind of rely on them to do the right thing if the plans don't pan out. >> is there something specifically you're looking for them to do in the near-term, whether it's spinoff the credit card business or potentially ban a umt, what are you looking for anything to happen in the near term? >> i was a big supporter of the big proposal from trill yam asset management. report back to shareholders. seven proposals for citi's proxy. that would have been my proposal number eight. that's what's missing from the meeting. >> interesting. >> hey, mike, it's carl back at post nine. we have talked to you repeatedly about your calls to do something transformational. you talk about how you're half

reassured. are you willing to step off the gas here? is your appetite for activism been whetted here? >> i don't think it's changed at all. what i've seen the last several months is i've seen an aggressive expense reduction plan by the ceo late last year. i've seen him take actions with his management team. i've seen a blueprint where they're going to remediate revenues that are 10% of their business. and i've seen -- at least set the right tone at the top of the company. so i think i probably have the same view as micro kneel, the chairman, watch him like a hawk, make sure they're on the path. the stock price is performing better. the roe for the company in the first quarter was 8%. if you strip out some of the tax credits, it would have been as high as 14%. and we also saw good progress in citi holdings, that basket of $150 billion of problem assets. that was unexpected. good news. so if that continues, then, yeah, the activism side won't be as fierce.

on the other hand, if they, you know, go off a little bit the next few quarters or year, then i'll be back at next year's annual meeting to answer these questions much more aggressively. >> there is a lot of ink that's been devoted between mike o'neill viewed as a strong voice chairman and mike corebat as ceo. there seems to be something of a leash today with o'neill taking the bankrupt brunt of the questions. do you feel comfortable with the length of the leash on mike and his relationship with the chairmen? >> it was reassuring to be at the meeting today. i would not have missed that for the world. mike o'neill, the chairman, said his job is to help evaluate the strategy, vet it out and make sure it's implemented successfully. but he says from there he's not going to be intrusive and then has a long leash for mike corebat to run the place. >> definitely a change of tone, interesting to hear your thoughts. mike mayo from clsa joining us from the annual shareholder meeting. back to you at post nine. >> mike, great to have you.

kayla tausche and mike mayo outside the meeting. a lot more "squawk on the street" straight ahead. do you have any questions or comments for the "squawk on the street" gang? well, head to twitter and follow us @squawkstreet right now. send us a tweet and you may see it on the air. oh, and be nice. "squawk on the street" will be right back.

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apple returning $100 billion to shareholders through dividend and buyback boosts. brings us to this morning's "squawk on the tweet" question. if having the biggest dividend can't get investors excited about apple, what would get the magic back? dain writes, how about an iphone with every stock purchase? i would be buying every day. vantage points tweets adding chris angel to the board might help bring the magic back. so far $300 billion has disappeared. and jim writes, star trek tele porter. that actually might come in handy. take a look at procter & gamble. this is the worst day for the stock since may of 2010. they did beat by about 3 cents. volume was up, share was up. but their forecast for the fiscal year short a consensus